A powerful earthquake rocked southern Alaska on December 30, 2018. The quake measured 7.0 magnitude and struck just north of the city of Anchorage, home to about 300,000 residents. As the most seismically active state in the US, Alaska was well prepared for a strong earthquake. Fortunately, it appears the damage to most buildings in Anchorage was minimal, although some roads and bridges were severely damaged. Events such as this are an earthquake insurance reminder and an opportunity to evaluate your home insurance coverage.
Nearly every homeowner insurance policy excludes damage from “earth movement” which includes earthquake and aftershocks. An example of this exclusions reads as follows (Acuity form H-430 11/17):
b. Earth Movement, meaning:
(1) Earthquake, including land shock waves
or tremors before, during or after a volcanic
(2) Landslide, mudslide or mudflow;
(3) Subsidence or sinkhole; or
(4) Any other earth movement including earth
sinking, rising or shifting.
This exclusion applies regardless of whether
any of the above, in (1) through (4), is caused
by an act of nature or is otherwise caused.
However, direct loss by fire, explosion, theft or
breakage of glass or safety glazing material
which is part of a covered building, storm door
or storm window, resulting from any of the
above, in (1) through (4), is covered.
Commercial property insurance policies, likewise, almost always exclude coverage for earth movement or earthquake. The earth movement exclusion in the ISO CP1030 10/12 form reads as follows:
b. Earth Movement
(1) Earthquake, including tremors and aftershocks and any earth sinking, rising or shifting related to such event;
(2) Landslide, including any earth sinking, rising or shifting related to such event;
(3) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased;
(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.
But if Earth Movement, as described in b.(1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.
(5) Volcanic eruption, explosion or effusion.But if volcanic eruption, explosion oreffusion results in fire, building glassbreakage or Volcanic Action, we will pay for the loss or damage caused by that fire, building glass breakage or Volcanic Action. Volcanic Action means direct loss or damage resulting from the eruption of avolcano when the loss or damage is caused by:
(a) Airborne volcanic blast or airborneshock waves;
(b) Ash, dust or particulate matter; or
(c) Lava flow.
With respect to coverage for Volcanic Action as set forth in (5)(a), (5)(b) and (5)(c), all volcanic eruptions that occur within any 168-hour period will constitute a single occurrence. Volcanic Action does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss or damage to the described property. This exclusion applies regardless of whether any of the above, in Paragraphs (1) through (5), is caused by an act of nature or is otherwise caused.
Coverage for earthquake damage is commonly available in Nevada. Most homeowners insurance providers offer a buy-back endorsement that will provide coverage for earthquake or, in some cases, broad coverage for all types of earth movement. Some insurance carriers will exclude damage to masonry veneer or stonework (considered “cosmetic” damage) and many earthquake coverage forms use a percentage deductible, rather than a flat, fixed amount.
Commercial building owners may have several options to consider when securing earthquake insurance. A Difference-in-Conditions (DIC) policy can provide coverage for both earthquake and flood losses. Or, your insurance carrier may offer an earthquake and volcanic eruption specific endorsement, such as the CP1040 10/12.
If you have questions about earth movement exclusions and your options to purchase earthquake insurance, please contact the professional team at Safeguard Insurance today.